Mkara bakers bought a machinery of Sh. 1,500,000. The Machinery is expected to produce 3 million loaves during its life time and has a salvage value of Sh. 150,000. For the ten years, the schedule of actual production is as follows; Year Units produced 1 450,000 2 420,000 3 360,000 4 300,000 5 270,000 6 300,000 7 330,000 8 240,000 9 180,000 10 150,000 Total 3,000,000 Required: (i) Calculate the depreciation charge per pencil. (ii) Prepare a depreciation schedule for this machinery using the units of production approach.

(i) Depreciation charge per pencil = Sh.1,500,000-Sh.150,0003,000,000=Sh.1,350,0003,000,000=Sh. 0.45

Answered: Mkara bakers bought a machinery of Sh.…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

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Mkara bakers bought a machinery of Sh. 1,500,000. The Machinery is expected to produce 3 million loaves during its life time and has a salvage value of Sh. 150,000.

For the ten years, the schedule of actual production is as follows;

Year

Units produced

450,000

420,000

360,000

300,000

270,000

300,000

330,000

240,000

180,000

150,000

Total

3,000,000

Required:

(i) Calculate the depreciation charge per pencil.

(ii) Prepare a depreciation schedule for this machinery using the units of production approach.

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